Novartis is looking to expand in the hot hepatitis C market by licensing rights to Enanta Pharmaceuticals of the USA's experimental drug EDP-239.

Under the terms of the deal, the Swiss major will shell out an upfront fee of $34 million and milestone payments of up to $406 million. Enanta is eligible to receive tiered double-digit royalties and retains co-marketing rights in the USA.

Novartis will be responsible for all costs associated with the development, manufacture and commercialisation of EDP-239, an NS5A inhibitor which will soon go into trials; the US Food and Drug Administration recently approved an investigational new drug application for the treatment.

The Watertown, Massachusetts-based firm said research has shown that "targeting NS5A gives rise to profound antiviral activity, and as a result, this protein has emerged as an important target" for HCV. Other companies are looking at NS5A; eg Bristol-Myers Squibb is testing an protease inhibitor - BMS 650032, in combination with the NS5A inhibitor BMS 790052 in a quadruple regimen with PEG-IFN/ribavirin.

Chief executive Jay Luly added that "we believe EDP-239 has great potential as a potent ingredient in combination drug therapy, and our preclinical studies have demonstrated high potency against multiple genotypes of the virus". He added that the drug also has an "excellent safety profile and a preclinical pharmacokinetic profile amenable to once-a-day dosing in humans".

Getting the rights to EDP-239 shows how seriously Novartis is taking HCV. Its pipeline in the area is headed by a first-in-class drug alisporivir, a cyclophilin inhibitor for which promising mid-stage data was recently published.

There has been a lot of activity in the HCV arena of late. Gilead Sciences bought Pharmasset for a jaw-dropping $11 billion, while B-MS has just completed its $2.5 billion purchase of hepatitis specialist Inhibitex.

Last May saw the approval of two new HCV drugs, Merck & Co's Victrelis (boceprevir) and Vertex's Incivek/Incivo (telaprevir); the latter has made a stunning start and had fourth-quarter sales pushing $500 million.